The resource allocation problem under capitalism

We humans are a productive bunch.  We are constantly making and tinkering things, and keeping busy, buying and selling, etc. All these actions become what we now call economic activities.  In the process, we keep transforming the face of the Earth, taking natural resources and turning them into something we consume.  In the beginning it is mainly for basic survival physical needs.  Then our collective self-interest in the name of economic growth and prosperity keeps us perpetually peddling goods and services to accumulate profit and/or money.  As individuals, we have no or partial regard and understanding as to how we, as an aggregate, affect the planet’s whole ecosystem and all of its inhabitants; and whether any of these human actions and activities are good or bad collectively, both in the short term and the long term. We are lucky that the consequences so far have not decimated our species.  But how do we know when we have gone too far and the next human action can be the last straw that breaks the camel’s back?

Professor King came back today to explain to our group how the capitalist economy allocates our resources which include natural material resources, like land, raw materials, etc.; financial resources, like money, capital, investments, etc.; and human resources, like labor, talents, time, innovation, ideas, entrepreneurship, etc., that are being utilized in our economy and how the processes affect our natural environment and drive climate change.

Except in totalitarian and authoritarian regimes, the capitalist economy more or less determines the allocation of all available resources and uses the free market system to set the buying and selling prices of such resources and their entailing final products. However, using such a system to allocate resources is not exactly ideal. Since the goods goes to the highest bidder, the entities that have the most financial resources become the most powerful actors in the free market, and also the dictators of how and where those resources are being extracted, deployed and utilized. Oftentimes, the profit motive is so powerful that it can result in pillage, corruption, market manipulation, law breaking and all sorts of irresponsible behaviors toward the most sought after resources. On the other hand, the poor population does not even get the products and services for basic survival since there is not much profit to be made.

Even within the legal commercialized environment, you can buy almost anything if the price is right, because someone will procure or make the goods or services to sell to you if he can make a profit out of it.  This is the basic economics of demand and supply.  Through these transactions, the stream of turning different resources into goods and services for customers is constant and ever expanding, as the world population explodes, the growing economies become rich, international trades increase and globalization spreads.

In an absolutely sustainable world or one with unlimited resources, the danger will be a less existential problem.  However, on Planet Earth, the aforementioned resources keep facing exploitation, misuse, waste and diversion, and additionally for natural resources, they suffer from pollution and depletion, with increasing frequency and severity, while capitalism charges ahead in the name of economic development with carbon intensive industries propelling climate change with no solution in sight.

The logic of capitalism is simple.  It over-serves wants and under-serves needs. The tactic of capitalism is simple.  It overrates wants and underrates needs. The appeal of capitalism is simple.  It taps into human nature.  Wants are infinite while needs are finite. Wants are interesting while needs are boring.  Wants are premium while needs are basic.  Wants are sophisticated while needs are humble.  Wants are fabulous while needs are mundane.  Wants are glamorous while needs are ordinary.  Wants are fanciful while needs are practical.  Wants are alluring while needs are homely.  Wants are unique while needs are commonplace.  Wants are elaborate while needs are modest.  Wants are desirous while needs are indifferent.  Wants are never ending while needs are intermittent.  Wants concern everywhere and anytime while needs concern here and now.  Wants bring a fortune while needs bring a pittance.  Need we say more?

By aligning our resource allocation with wants instead of needs and necessities, capitalism promotes consumption over conservation, quantity over quality, planned obsolescence over durability, immediacy over futurity, convenience over utility, novelty over permanence, disposability over reusability, extravagance over economy, profligacy over frugality, thrills over practicality, customization over standardization, fashion over function, glut over satiety, speed over safety, single-use over longevity, fast food over slow food, money over values, personal gains over public good, private profit over income equality, etc.  The list goes on and you get the message.

According to Mohandas K. Gandhi, “There is a sufficiency in the world for man’s need but not for man’s greed.”  We are all guilty and complicit.  We are all active participants in this capitalist venture that we are deluded to think as necessary for progress, for our benefits and for our civilization.  The result of the constant chase of profit at the expense of the more important stuff comes back to haunt us: In the bigger picture, the Planet Earth suffers and pays the price, surely and slowly, and hence, the tragedy of the commons is going to doom us all.

We accept capitalism as a given and we have been unwittingly co-opted into an unsavory role in this global capitalist apparatus.  We supply our labor, talents and manpower to the capitalist corporate robber barons and their disparaging enterprises to take advantage of the system for their own self-enrichment.  We hand over our cash as indifferent consumers who buy into their empty materialistic proxies for happiness and goodness.  We waste endless hours to participate and perpetuate in the merry-go-round of this consumption-driven lifestyle.  All these human resources that are misdirected and misguided could have been put to better, more meaningful and more purposeful uses, e.g. to solve urgent and important humanitarian problems or to save and help our world and our people.

It is almost ironic that we can move mountains and send people to the Moon, but we cannot eradicate food insecurity and poverty, the major causes of human suffering, not for the lack of food and money which we know we have enough, but for the lack of compassion and conviction.  Why can’t we have just one more Moon shot project to end world hunger once and for all instead of gazillion startups for more e-commerce?  Can capitalism ever put human welfare before profit?

We did not learn from nature.  We keep taking and taking but do not give back except the bad stuff: wastes, pollutants, scars, spoilages, mutilations, ruins…  There is no circle of life.  We are at the top of the food chain decimating everything within our reach.  The end is near because there is nothing left for us to consume.  When and where will we learn to stop the destructive forces and start the constructive forces?  We should not wait till we reach the breaking point where we are made to stop what we have been doing wrong but start now doing what we should be making right.

Let us imagine what if…